Wholesale Pricing for Products & Services
Let’s just put this out there – pricing your products & services can be a challenge. Especially when you get to the point in your business where you want a solid profit plan.
What often happens is that entrepreneurs & small business owners forget to pay themselves and to incorporate not only the cost to produce the product or service but also the cost to sell it.
There are two prices we generally work with – especially for products that we are producing and selling.
- Wholesale Price
- Retail Price
Now I use the term wholesale carefully. When people hear it they automatically assume it means you’re selling lots of items for a reduced price to another store or outlet to sell for you.
I’ve heard from many entrepreneurs they are hesitant to go down the consignment or wholesale route because of the reduction in their profit.
That’s when I know they aren’t properly pricing their product to include their profit.
So let’s take a look at what’s in each price
Wholesale Pricing for Small Business
I recommend starting with your wholesale price before you determine the retail. It helps you to build the profit in where it should be – in your wholesale price.
Now we call this price wholesale because it definitely is the price you might offer a store or third-party to sell your work but it’s also the price you put in your profit plan to accurately budget for ad spend, employees and packaging.
The wholesale price is the cost to produce the product or service PLUS your profit. The amount you want to take home or use to invest in your business.
Then you’re going to double or even triple this amount to get the retail price. The amount that is the difference between retail and the wholesale price is the COST TO SELL OR TAKE IT TO MARKET.
If you are selling the item yourself, this amount pays for things like market fees, website costs, employee payments, paying yourself for the work you do in administration, marketing, photography and design, shipping packaging and things like bags, wrapping and marketing materials.
You are not losing money by allowing someone else to sell your items for you. Because you have already factored in that expense. What you gain is more time in your business doing what you’re meant to do. Where the magic is. When you spend the time marketing or selling your product, you’re not making more product to sell and you’re not available to provide the service you are selling.
Entrepreneurs Deserve to Get Paid
Make sure you’re getting paid to run your business and that you’re not just covering your costs – that’s the difference between a surviving business and a thriving business!
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